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Some weekends, digglahhh will be writing about Orwellian language-and-politics themes hidden in sports, entertainment, culture, and society. You can also click on the digglahhh tag to view all of them.

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Archive for November, 2008

There’s a lot of debate about whether to throw money at the big-three Detroit automakers or just let them go down the drain. I think we can do neither, and still solve two problems at once.

Suppose instead of giving the automakers bailout money or loans, or buying bonds from them, we took on their health benefits obligations. This would dramatically lower their per-car cost of production, going a long way toward making them competitive in U.S. markets and plenty of overseas ones.

As it happens, Obama proposed legislation that would do that back in April 2007.

The Health Care for Hybrids Act would address the unique challenges of the U.S. auto industry and reduce our country’s dependence on foreign oil at the same time. This bill would set up a voluntary program in which domestic automakers could choose to receive federal financial assistance to cover 10% of their annual legacy health care costs through 2017. The companies that participate in the program would be required to invest at least 50% of their health care savings into manufacturing fuel efficient cars, such as hybrids and advanced diesel vehicles in the United States, or helping domestic parts suppliers retool their manufacturing plants to produce advanced parts.

To me, that seems like an enormous step in mostly the right direction, though awfully convoluted. If we want to decrease gas consumption and increase fuel efficiency, we already have laws to do that. We already have the CAFE standard, just increase the number. (Step #0: include SUVs.)

As for supporting hybrids, respectfully, I ask, why? I mean, they’re a great set of technologies right now, and maybe the way to go, but why have the government pick the winning technology in advance? This seems like a great area for letting the market decide. The only real example we have of the government picking an alternative energy has been ethanol, a politically-driven disaster of a choice. (And frankly, the U.S. automakers are years behind with their hybrids. We should pray they come up with something better.)

The car companies claim that each and every car “contains $1,500 in health costs that their Japanese competitors don’t face,” according to the libertarians at the Reason Foundation. Another way of looking at it – and the numbers here derive from some at the Labor Research Association, a labor advocacy organization – is that health-care amounts to about 8-9% of the wages+benefits that autoworkers get. So taking on health care would be the same as letting Detroit slash autoworker salaries by that amount, without having to make the slightest dent in autoworker paychecks.

As I say, Obama’s 2007 legislation seems overly complicated. Why don’t we simply put them into the Government Employees Health Association, the same health insurance that millions of federal workers, including Congress itself, has?

It would cost the government something like $6 billion a year, which is in the range of the lump-sum $25-50 billion being contemplated for a bailout (with a smaller up-front cost). Most importantly, it would offer Detroit real relief, helping them compete in the marketplace, while not impeding the forces of market destruction and renewal that ought to be operating here. In other words, if the car companies still fail, so be it. And one thing we won’t have to worry about is a million autoworkers suddenly losing their health benefits.

Finally, it would use the current crisis to jumpstart a process that needs to take place anyway – getting all Americans covered by some form of health care. The problem with Obama’s campaign proposals for health care is the same as the problem with his Health Care for Hybrids Act. Each makes too many concessions to the status quo – they’re not radical enough.

The Health Care for Hybrids Act locks us into hybrid technologies. Similarly, Obama’s health care proposals just lock us further into the absurd system of making employers responsible for health care. Doing so universalizes the very problem that the automakers have – adding the cost of health care to a business’s costs of production, when its foreign competitors don’t have comparable production costs.

Ironically, this problem started in Detroit, so it would be sweet irony to solve it there. As Malcolm Gladwell wrote a couple of years ago in The New Yorker (The Risk Pool), back in 1950, the president of General Motors, Charles E. Wilson,

“was in contract talks with Walter Reuther, the national president of the U.A.W. The two men had already agreed on a cost-of-living allowance. Now Wilson went one step further, and, for the first time, offered every G.M. employee health-care benefits and a pension.

Reuther had his doubts. He lived in a northwest Detroit bungalow, and drove a 1940 Chevrolet. His salary was ten thousand dollars a year. He was the son of a Debsian Socialist, worked for the Socialist Party during his college days, and went to the Soviet Union in the nineteen-thirties to teach peasants how to be auto machinists. His inclination was to fight for changes that benefited every worker, not just those lucky enough to be employed by General Motors. In the nineteen-thirties, unions had launched a number of health-care plans, many of which cut across individual company and industry lines. In the nineteen-forties, they argued for expanding Social Security. In 1945, when President Truman first proposed national health insurance, they cheered. In 1947, when Ford offered its workers a pension, the union voted it down. The labor movement believed that the safest and most efficient way to provide insurance against ill health or old age was to spread the costs and risks of benefits over the biggest and most diverse group possible. Walter Reuther, as Nelson Lichtenstein argues in his definitive biography, believed that risk ought to be broadly collectivized. Charlie Wilson, on the other hand, felt … that collectivization was a threat to the free market and to the autonomy of business owners. In his view, companies themselves ought to assume the risks of providing insurance.

Pension systems throughout the U.S. are in bad shape as well. Back in 2006, Gladwell noted

America’s private pension system is now in crisis. Over the past few years, American taxpayers have been put at risk of assuming tens of billions of dollars of pension liabilities from once profitable companies. Hundreds of thousands of retired steelworkers and airline employees have seen health-care benefits that were promised to them by their employers vanish. General Motors, the country’s largest automaker, is between forty and fifty billion dollars behind in the money it needs to fulfill its health-care and pension promises.

If GM’s health and pension obligations were at least mostly funded two years ago, we can only imagine how they’re doing in a stock market that’s lost nearly half its value since then.

This crisis is sometimes portrayed as the result of corporate America’s excessive generosity in making promises to its workers. But when it comes to retirement, health, disability, and unemployment benefits there is nothing exceptional about the United States: it is average among industrialized countries—more generous than Australia, Canada, Ireland, and Italy, just behind Finland and the United Kingdom, and on a par with the Netherlands and Denmark. The difference is that in most countries the government, or large groups of companies, provides pensions and health insurance. The United States, by contrast, has over the past fifty years followed the lead of Charlie Wilson … and made individual companies responsible for the care of their retirees. It is this fact, as much as any other, that explains the current crisis. In 1950, Charlie Wilson was wrong, and Walter Reuther was right.

We could kill another two birds with one stone by fixing and expanding Social Security and folding in all these failing – and soon to be failing – pension plans and 401Ks. But let’s take on only one pair of crises at a time.

I came across an interesting description recently. Does it sound like our soon-to-be-ex president?

* Glibness and Superficial Charm

* Manipulative and Conning
They never recognize the rights of others and see their self-serving behaviors as permissible. They appear to be charming, yet are covertly hostile and domineering, seeing their victim as merely an instrument to be used. They may dominate and humiliate their victims.

* Pathological Lying
Has no problem lying coolly and easily and it is almost impossible for them to be truthful on a consistent basis. Can create, and get caught up in, a complex belief about their own powers and abilities. Extremely convincing and even able to pass lie detector tests.

* Lack of Remorse, Shame or Guilt
A deep seated rage, which is split off and repressed, is at their core. Does not see others around them as people, but only as targets and opportunities. Instead of friends, they have victims and accomplices who end up as victims. The end always justifies the means and they let nothing stand in their way.

* Shallow Emotions
When they show what seems to be warmth, joy, love and compassion it is more feigned than experienced and serves an ulterior motive. Outraged by insignificant matters, yet remaining unmoved and cold by what would upset a normal person. Since they are not genuine, neither are their promises.

* Incapacity for Love

* Need for Stimulation
Living on the edge. Verbal outbursts and physical punishments are normal. Promiscuity and gambling are common.

* Callousness/Lack of Empathy
Unable to empathize with the pain of their victims, having only contempt for others’ feelings of distress and readily taking advantage of them.

* Poor Behavioral Controls/Impulsive Nature
Rage and abuse, alternating with small expressions of love and approval produce an addictive cycle for abuser and abused, as well as creating hopelessness in the victim. Believe they are all-powerful, all-knowing, entitled to every wish, no sense of personal boundaries, no concern for their impact on others.

* Early Behavior Problems/Juvenile Delinquency
Usually has a history of behavioral and academic difficulties, yet “gets by” by conning others. Problems in making and keeping friends; aberrant behaviors such as cruelty to people or animals, stealing, etc.

* Irresponsibility/Unreliability
Not concerned about wrecking others’ lives and dreams. Oblivious or indifferent to the devastation they cause. Does not accept blame themselves, but blames others, even for acts they obviously committed.

There’s a weird thing going on at Planet Money, where they call in expert economists, analysts, and investment gurus to explain what’s going on. To a person, they say, “buy more stuff.” The NPR staffers themselves also continually exhort us to buy more stuff.

If people stop buying, the economy will crash, jobs will be lost, and people won’t have the money to buy anything. So the creepy idea, which they acknowledge, is that the common good dictates we all engage in a behavior that, everyone seems to understand, is individually risky and arguably incredibly stupid, which is to stop saving money for a rainy day when you can already see the lighning and hear the thunder.

And the reasons people have stopped spending seem pretty obvious. People are terrified they will lose their jobs, or their spouses will lose their jobs, or their aging parents will lose their jobs, or their kids just entering the workforce will have to move back home because they lost their jobs or never got one in the first place. A story yesterday asks, quite plausibly, Will US Unemployment Hit 10%? The most recent figure is 6.1% and, as the article notes, will certainly have risen to about 6.3% when the October numbers come out. And that’s taking the government’s bogus numbers at face value. A government-certified 10% would of course be as much as twice that in real life.

The obvious next question, which people haven’t yet really started to ask, is, If people are not spending money in general, what about the Christmas shopping season? If holiday spending falls off a cliff, might that not be enough to push us from recession to depression (if we’re not already headed there anyway)?

Private equity firms embarked on one of the biggest spending sprees in corporate history for nearly three years, using borrowed money to gobble up huge swaths of industries and some of the biggest names — Neiman Marcus, Metro-Goldwyn-Mayer and Toys “R” Us.

The new owners then saddled the companies with the billions of dollars of debt used to buy them. But now many of the loans and bonds sold to finance the deals are about to come due at the worst possible time.

Of course, GM’s financing arm, GMAC, is owned by private equity, so there’s a double-whammy all its own. Speaking of which, private equity firm Apollo Management, which owns Linen’s ‘n Things, also owns Century 21, which surely would be in trouble anyway with the real estate market in a deep freeze.

The Reuters/University of Michigan index of consumers sentiment dropped from 70.3 in September to 57.6 in October. The measure, in which the larger the number. the greater the confidence, averaged 85.6 last year.

In a further dose of gloomy economic news, the Institute for Supply Management-Chicago reported that its index — a gauge of employment and demand — fell from 56.7 in September to 37.8 in October.

The stories in the news right now are about stores preparing to woo customers for the holidays.

To appreciate the significance of these numbers, you need to know that American consumers almost never cut spending. Consumer demand kept rising right through the 2001 recession; the last time it fell even for a single quarter was in 1991, and there hasn’t been a decline this steep since 1980, when the economy was suffering from a severe recession combined with double-digit inflation.

Also, these numbers are from the third quarter — the months of July, August, and September. So these data are basically telling us what happened before confidence collapsed after the fall of Lehman Brothers in mid-September, not to mention before the Dow plunged below 10,000. Nor do the data show the full effects of the sharp cutback in the availability of consumer credit, which is still under way.

So this looks like the beginning of a very big change in consumer behavior. And it couldn’t have come at a worse time.

John McCain supporters who believe they haven’t gotten a fair shake from the media during the Republican’s candidacy against Barack Obama have a new study to point to.

Comments made by sources, voters, reporters and anchors that aired on ABC, CBS and NBC evening newscasts over the past two months reflected positively on Obama in 65 percent of cases, compared to 31 percent of cases with regards to McCain, according to the Center for Media and Public Affairs.

ABC’s “World News” had more balance than NBC’s “Nightly News” or the “CBS Evening News,” the group said.

Meanwhile, the first half of Fox News Channel’s “Special Report” with Brit Hume showed more balance than any of the network broadcasters, although it was dominated by negative evaluations of both campaigns. The center didn’t evaluate programs on CNN or MSNBC.

Let’s look at the numbers.

The center analyzed 979 separate news stories shown between Aug. 23 and Oct. 24, and excluded evaluations based on the campaign horse race, including mention of how the candidates were doing in polls. For instance, when a voter was interviewed on CBS Oct. 14 saying he thought Obama brought a freshness to Washington, that was chalked up as a pro-Obama comment.

When NBC’s Andrea Mitchell reported Oct. 1 that some conservatives say that Sarah Palin is not ready for prime-time, that’s marked in the negative column for McCain.

So by this account, Hume is objective, while ABC, though better than the other networks, is partisan. Yet by the very numbers being reported, the tilt on Hume’s show is 1.39:1, while, that of ABC is 1.36:1.

But the study doesn’t even say that the media reporting is biased, just that Obama-Biden has come off better. That’s surely true, and should come as no surprise.

If the Obama campaign had lots of good things happen, such as good poll results, or major endorsements (eg, Colin Powell’s), and the press reports it, those are going to count as favorable mentions. And if bad things happen to the McCain campaign, they’re going to lead to reports that get counted as unfavorable. But that’s just reporting on what happens.